Investing in the stock marke. is one of ways to earn decent returns especially when you are investing for long term time horizon. However, there are some general risks involved which may well be outlined below for your better understanding of the stock market. These types of risks include:

1. Volatility: Volatility refers to price fluctuation of a stock or security over a period of a year. Not just the stock itself but also the market may be affected by volatility in a particular industry/sector or across the board. Volatility can occur due to the following reasons in general:

• Geopolitical Events: In a world where businesses are interlinked, an event occurring in one economy can have an impact on another. For example, a recession or an economic downturn in e U.S. can have an adverse impact on Pakistan and economies globally. Similarly, a military threat posed by one country to another can have an adverse effect on the economies of both the countries and/ or the countries of the region or the countries having close economic relations with those countries.
• Economic Events: Any significant change in the monetary policy, tax regulations, GDP growth, export and import figures etc., or even the weather can have an impact on the economy of a country. This in turn causes volatility in the PSX.
• Inflation: The rising costs of goods and services or government action along those lines can impact the future value of assets such that income may be reduced on account of less purchasing power. Inflation can cause volatility in the markets/PSX.

The above factors can impact the volatility of stocks or securities and make the market/PSX go up or down in accordance with the unfurling of events or the rise and fall of inflation.

2. Timing: Trying to predict how the market will play out in the future and accordingly investing in the market is called timing. It is logical to think that one should buy when the market is at a low and sell when the market is at a high. That seems like sound advice.
While it is easy to think that way, it is not easy to implement the same.